The choice of an invoice finance partner can be time consuming and usually involves a decision between several lenders as to which is the best company to suit your needs. However, as time progresses, it is sometimes appropriate to look for a more suitable invoice finance company, for example:-
Costs are considered high and another company is offering better terms
Trading conditions have changed meaning that one or more of your customers is/are no longer considered suitable for funding by your existing invoice finance provider
The way you do business has changed – perhaps involving contracts or stage payments which your existing finance company is unhappy with.
The good news is that there is a process in place to ensure the transfer process is completed as effectively as possible. The process is documented in the UK Finance website (https://www.ukfinance.org.uk/system/files/UKF-IFABL-IMTG-Publication-for-website-2018.pdf), and is called the Inter-Member Transfer Process (IMPT), although more commonly termed the “inter-factor process”.
Should you decide to move providers, you will either need to repay the existing factor directly before starting with the new provider, or alternatively the incoming finance provider will need to repay the outgoing provider.
Assuming repayment is to come from a new provider to the outgoing provider this will involve:-
Selection of a new provider, whose terms (eg prepayment, credit limits, concentration limits, recourse period) will ensure there is enough availability on transfer day to clear the outgoing provider (including any fees they may reasonably charge)
Giving the required contractual notice to the existing provider
Signing new documentation with the new provider (ie Factoring / Discounting Agreement, Terms and Conditions and Personal Guarantees or Warranties)
Providing ledger details to the new provider (invoice details and customer details) to enable them to undertake a verification exercise
Agreeing a convenient date for the transfer following which all security will be released by the original provider
Once the transfer has completed, it is usual that there will be some overlap whereby customers pay the old finance company rather than the new one. The IMPT involves agreement that any funds will be paid over to the new company within four working days.
Using a finance broker will assist the process as we are used to the processes involved and can give suitable advice for managing the process.
